The Group has a 96% interest of an indirect owned subsidiary 齊齊哈爾市東北石油開發有限責任公司, which owns an oilfield project in Fulaerji District near Qiqihar City of Heilongjiang Province of China with a total production area of 36.94 km2.
The Fulaerji Oilfied is located in the north end of the overlap belt in the west slope of Songliao Basin and meanwhile, located in Fulaerji District and Milisi District close to Nenjiang River in Qiqihaer, Heilongjiang Province. To the south of the oilfield stand the Fulaerji industrial area and Nenjiang meander belt and swamp coast, while to the north exists farmland. The Bin-Zhou Railway (Harbin to Manchuria) runs from east to west cross the midst of the oilfield and the Qi-Fu Road mainline crosses the oilfield from north to south. Well equipped with water and power supply, communication and transportation facilities. Qiqihar city owns a flourish economy and convenient transportation, which provides favorable conditions for oilfield development.
The Fulaerji Oilfied contains cold, waxy crude (API 20°). (Note: API stands for American Petroleum Institute)
In 2015, the Group subcontracted the operation of the oilfields in the Fu 718, Fu 710 and Meilisi 723 areas in Qiqihar (“Oilfields”) to an independent oil service professional (the “Contractor”), which the Contractor provides on-site technical and management services in respect of the latter’s exploration and production activities on Oilfields. The Contractor is responsible for all operation costs as well as to invest funds in drilling new wells and oilfields related long term investment. In return for the provision of those services, the Contractor will share majority of total crude oil revenue during the service period.